China’s Persian Gulf Interests or Why China Wants (Needs?) Peace


China wants peace in the Persian Gulf.

It does sound like a rather amusing statement in light of the fact that, especially when it comes to the Donald Trump administration, China tends to be portrayed as the #1 adversary of the West, of human rights, of freedom or yes, even ultimately peace.

While it is difficult for China to wiggle its way out of admitting its major problems when it comes to issues such as human rights or freedom, the same is not valid when it comes to peace in general and peace in the Persian Gulf in particular.

Now that everyone stopped laughing, we can move on to explaining why.

First and foremost, no, it has absolutely nothing to do with ethical reasons but rather, as tends to oftentimes be the case with China, pragmatism.

On a historical scale, when it comes to this cycle of China’s existence at least, it barely started asserting itself as a soft power, let alone a hard power. Simply put, those who believe China will not dethrone the United States anytime soon are most likely correct because from a wide range of perspectives, it is just not ready to do so.

While it is most likely only a matter of time until China dethrones the United States from a nominal GDP perspective, this is where it stops, with it being far behind when it comes to a wide range of other metrics: the prosperity level of the average individual that is illustrated by indicators such as the GDP per capita (roughly 6.5 lower in China than the US and closer to that of under-developed nations than the proverbial West), the state of China’s military sector that is still plagued by sub-optimal development and corruption despite the efforts of the Xi Jinping administration (we have an article about just that which can be accessed by clicking HERE) and the list could go on and on.

No, when it comes to most metrics, China is not “ready” to take over.

And no, China doesn’t want peace for emotional reasons but rather because… well, it needs it to thrive.

Despite not being the #1 consumer of oil yet (a position that is still occupied by, of course, the United States), China is the number one importer of oil worldwide. This is because, yes, the United States consumes more oil but it also produces more, whereas China only manages to produce roughly one-third of what it consumes. Make no mistake, China’s oil production is impressive in nominal terms but compared to its needs, it’s just not sufficient.

This puts China in a more volatile position with respect to aspects such as oil price volatility and the same principle is valid for a wide range of other commodities that China needs and relies on imports for. Volatility that can be brought about by more than a few factors: simply market-related price action, natural disasters, endogenous problems associated with one or several oil producing nations, exogenous shocks such as a global financial crisis and… well, war.

A nation which consumes in excess of 12 million barrels of oil per day and imports two-thirds of that would essentially be shooting itself in the foot by promoting instability in a region on which it depends. Now, granted, China does its best to diversify and avoid putting all of its eggs in one basket. As such, one can rest assured that whenever we are dealing with a nation which exports oil, China represents its #1 buyer and from a game theory perspective, this makes perfect sense.

Even during times of peace and (relative) prosperity, it tends to be hard to juggle between buying oil from let’s say Saudi Arabia and buying Iran’s oil as well. Should things deteriorate geopolitically, another layer of complexity on top of an already extremely complex framework will inevitably be added and China does not want that.

Perhaps a textbook example to that effect is represented by the sanctions which have been re-imposed on Iran by the United States and the threats the US has made with respect to blacklisting companies that conduct business with Iran. Needless to say, China hasn’t exactly been thrilled by this state of affairs but, again, it essentially had no choice but to comply… somewhat. Yes, there have been workarounds such as shell companies that were created specifically for dealings with Iran and which conduct business outside the dollar system but still, it isn’t a situation China is pleased with.

For the reasons that have been covered thus far as well as a wide range of others, it should no longer be that difficult to understand that yes, China does indeed want peace in the Persian Gulf, just like it wants peace generally speaking so that the “business as usual” status quo prevails. The “why” dimension tends to be just as straightforward because, in a nutshell, China is just not ready to navigate murky and turbulent waters just yet (from more than one perspective).

Will the situation be strikingly different ten or twenty years from now?

It all depends on how things will stand as far as the proverbial geopolitical chess board is concerned. A more robust China in the context of a less robust United States might alter the rules of the game or, in other words, China may indeed decide that the right conditions have presented themselves for Beijing to be more willing to “embrace” chaos. That, however, is a statement strictly in the realm of speculation for now. At this point in time, the geopolitical landscape revolves around a clear US dominance and while many allies have expressed frustration with the attitude of the United States more so during the Donald Trump regime than in the past, it is most certainly not nearly enough to topple the status quo, especially in light of the fact that China is not a convincing enough emerging superpower… at least not yet.

Add a Comment

Your email address will not be published. Required fields are marked *